It has been rumored that Intel is encountering tight 14nm process production capacity in-house, and today a report claims that the chip maker is looking to outsource part of its 14nm chip production to Taiwan Semiconductor Manufacturing Company (TSMC).

According to Digitimes.com's "industry sources" in Taiwan, Intel's decision is to give priority to its high-margin products mainly server-use processors and chipsets amid its tight 14nm process capacity. Therefore, the company plans to outsource the production of its entry-level H310 and several other 300 series desktop processors to "rival" chipmaker TSMC.

Intel is said to have seen its overall 14nm chip supply fall short of demand by as much as 50%. Providing that increasing the 14nm process capacity is not an option, outsourcing may have become the only choice for Intel.

TSMC is already a contract manufacturer of Intel for SoFIA-series handset SoC chips and FPGA products, and makes Intel's baseband chips for use in the iPhone.

Motherboard makers expect the tight supply of Intel's 14nm chipsets to ease by the end of 2018.

Intel's tight capacity for 14nm mainly stems from its delay in advancing to 10nm. The company originally planned to enter mass production of its 10nm Cannon Lake processors in 2016, but has been pushing back the schedule. Intel's latest update is that its 10nm chips will not be ready for commercial production until the fourth quarter of 2019.

Intel declined to comment on the report.